3.5% Home Loan Down Payment A Thing of the Past??
The FHA is looking to improve the quality of loan packages starting with a bill that was introduced to Congress asking to raise down payments from the current 3.5 percent up to a minimum of 5 percent.
With the country suffering from record-high delinquencies and Fannie Mae and Freddie Mac experiencing the strain of their defaulted mortgages, the government is speedily looking to tighten up on standards including home buyer finances, credit and appraisal guidelines.
Currently, government-backed mortgages have lenient requirements that have helped millions of individuals become new homebuyers. But this has also negatively affected our housing market.
In the hopes of providing everyone with the opportunity to get a piece of the “American Pie” the government indulged too much in the dream to those who were not ready to become homeowners. We basically rode in that same boat as those giving out the conventional loans, albeit, perhaps a little bit farther behind, but the government was there too!
The government’s underwriting guidelines are very relaxed – not only can you buy a home without enough money saved up but you are not required to have a good credit score – a fair credit score is good enough!
• FHA Loans require a mere 3.5 percent down payment
• Sellers can pay most of the closing costs
• In reality, new homebuyers can currently finance up to 96 percent of the cost to purchase a home; very few associated fees are paid out-of-pocket by the prospective home buyer
Buying a home is a big investment and many new home buyers never fully realize what’s required of them. Every potential home buyer must ask “Am I ready to buy a home”. If something needs repairs you can’t just call up maintenance you’ve got to call in a professional and pay to have it fixed. And that doesn’t begin to address all the other homeowner bills that arrive each month. To help you understand all the requirements you should meet with a real estate agent who can explain what fits within your budget.
Now, the government realizes its downfall and is requiring home buyers to have more of a vested interest in the home buying game.
Bill Introduced to Congress Includes;
• Requirements for higher credit FICO scores to qualify for a government-backed loan
• Increase the mortgage insurance premiums
• Reduce seller concessions including down payment assistance from 6 percent to 3 percent
This bill is really in the infancy stages because without democratic backing it simply won’t pass and it’s probably a beginning to a very long end before resolution.
